Unsecured Loan Based on Salary: What You Need to Know When Applying

An unsecured loan based on salary is a type of loan where the borrower doesn't need to provide collateral. Instead, the borrower's salary or fixed monthly income serves as the basis for the loan amount and guarantees the ability to repay.

It's particularly useful for individuals who don't have assets to use as collateral or prefer not to put their assets at risk for the loan. However, interest rates and terms for these loans might be higher compared to secured loans, due to the higher risk involved for the lender. Before applying, careful consideration and review of specific terms are essential to ensure you can repay without difficulty.

Advantages of Salary-Based Unsecured Loans:

1. No Need for Collateral: Unlike secured loans, unsecured loans don't require borrowers to pledge assets like property, vehicles, or tangible assets. This helps borrowers avoid the risk of losing assets if they are unable to repay the loan.
2. Simple and Quick Procedures: The process for salary-based unsecured loans is straightforward and rapid, saving time and effort in preparing documents. Income confirmation is quick; borrowers can easily prove repayment capability through fixed monthly income from salary (transferred, directly received), or other income sources.
3. Accessibility for Many: These loans often don't have stringent financial conditions or mandatory ownership of specific assets. Therefore, they suit office workers, laborers, or those with social security benefits, widening access to financial resources.

With these advantages, an unsecured loan based on salary is an optimal choice for those needing quick loans without putting personal assets as loan collateral, avoiding loans from unlicensed lenders that charge extremely high interest rates.

Requirements for Salary-Based Unsecured Loans:

Conditions for these loans may vary depending on banks, credit institutions, or specific financial entities. However, here are some common prerequisites for borrowers seeking these loans:

1. Stable and Verified Income: Steady income: The borrower needs to prove a stable income from salary or another fixed income source. This assurance requires providing documents such as pay stubs, employment contracts, or other evidence of monthly income.
2. Age Criteria: Age range: Typically between 20 to 60 (or 65) years old is suitable for loan applications; however, this can vary depending on the financial institution's regulations.
3. Good Credit History: Financial institutions require a good credit record to ensure repayment capability.
4. Employment: Some lenders may require a certain period of employment or stable job tenure.
5. Legal Documentation: Personal documents: ID card, proof of residence, utility bills... Employment documentation: Documents related to employment and income like employment contracts, salary slips, social insurance...
6. Loan Characteristics: Loan amount: The loan amount might impact the necessary conditions; larger amounts might require stricter conditions.

Specific conditions might vary based on policies and regulations of each financial institution. Researching and understanding these conditions before applying are crucial for successful loan applications.

Loan Application Process Based on Salary:

The application process for salary-based loans typically involves these basic steps:

1. Research and Choose a Bank/Credit Institution:

• Investigate banks or credit institutions offering salary-based loan services.
• Compare interest rates, loan terms, and associated fees.

2. Prepare Necessary Documents:

• Personal documents: ID card, proof of residence, utility bills...
• Income-related documents: Employment contract, pay stubs, bank statements...

3. Submit Loan Application:

• Fill out the loan application form (either in-person or through online channels) provided by the bank or credit institution.
• Submit the required documents along with the application.

4. Verification and Assessment of Documents:

• The bank/credit institution will verify the information in your documents.
• They'll assess your repayment capacity and confirm your fixed monthly income.

5. Approval and Contract Signing:

• Upon approval, the bank or credit institution will send an approval notification and loan terms.
• If agreed, you'll proceed to sign the loan agreement.

6. Receive Loan Funds:

• After signing the agreement, you'll receive the loan either directly or through bank transfer.

Notes:

• The procedural timeline may differ according to each bank or credit institution.
• Reading and understanding the loan agreement's terms, including interest rates, tenure, and related fees, is essential.
• Timely repayments help improve your credit score, facilitating future borrowing.

Specific types of salary-based unsecured loans popular today:

1. Commercial Banks: Traditional unsecured loans: Commercial banks offer unsecured loans based on salary for individuals with stable incomes from large corporations or organizations.
2. State-Licensed Financial Institutions: Non-bank financial companies: These might offer salary-based unsecured loans with more flexible conditions compared to traditional banks.

Each financial company might have different policies, conditions, and levels of flexibility in offering these loans. Borrowers should research thoroughly, compare conditions, interest rates, and terms to choose the most suitable loan package.

Conclusion:

Thanks to its simple and fast process, unsecured loans based on salary provide convenient access to funds without requiring collateral. The flexibility in direct transfers or receiving cash also adds to the borrower's convenience. However, careful selection considering terms, interest rates, and policies of financial institutions is crucial. This helps borrowers make informed decisions aligning with their needs and repayment abilities.

To learn more about salary-based unsecured loans and apply to experience the convenience and flexibility in meeting your financial needs, check with Shinhan Finance for detailed and accurate guidance!

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• Hotline: 1900 54 54 49 (press 2 – Loan consultation)
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• iShinhan financial management application
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Shinhan Finance